Retirement
What is the difference between small APRA funds and SMSF?
What is the difference between SMSF and SAF? Let’s learn the difference between these funds and see which one will work best for you.

What is the difference between small APRA funds and SMSF?
What is the difference between SMSF and SAF? Let’s learn the difference between these funds and see which one will work best for you.

Superannuation is an important financial investment that helps you ensure your retirement will be what you envision it to be. These days, more Australians are choosing to have more control over their retirement savings by joining or setting up self-managed super funds (SMSFs).
But SMSFs are not the only type of small super fund that is available on the market. To help you know your choices, we’ll provide you with a comparison of the two most popular self-managed super options, SMSF and SAF (small Australian Prudential Regulation Authority [APRA] funds).
What are the similarities of an SMSF and a SAF?
Before we discuss the differences between an SMSF and a SAF, let’s look at how these two super funds are similar.
An SMSF is a type of a private super fund which is established, managed and controlled by its members, who are also trustees of the fund. In comparison, a professionally managed fund, such as an industry or retail fund, manages your super on your behalf.
Similarly, a small APRA-regulated fund is also a type of superannuation fund. It fundamentally operates like an SMSF, offering its members greater freedom and flexibility compared with retail or industry super funds.
Since both SMSFs and SAFs are trusts, both funds need trustees. Both funds can have no more than four members. Trustees or members of both SMSFs and SAFs have a high level of control over their superannuation investment and assets.
There are plenty of reasons why both small super funds are popular among Australians. Many people are drawn in by the low operational costs, tax planning advantages, greater estate planning flexibility and transparency offered by these funds. To learn more about SMSFs and other various superannuation options, read here.
What are the differences between these small funds?
Regulatory difference
The main difference between SMSFs and SAFs is that they are overseen by different regulators. As their name indicates, small APRA funds are regulated by the prudential regulator. On the other hand, SMSFs are regulated by the Australian Taxation Office (ATO).
So, how does this regulatory difference impact you? Since they are regulated by different bodies, SMSF and SAF operate under a different set of rules. It also means they don’t benefit from the same regulatory oversight.
In case of investment fraud or theft, SAF members (unlike SMSF members) can raise their complaints to the Superannuation Complaints Tribunal (for complaints resolution) and the Superannuation Compensation Scheme (which compensates super funds for losses resulting from fraud or theft).
Additionally, SMSFs are outside the regulation of the Australian Financial Complaints Authority (AFCA), where disputes over issues such as who receives a death benefit can be resolved at no cost. This means that APRA-regulated funds can apply to the government for compensation and can get resolution for disputes and complaints without paying fees, while SMSFs cannot.
Trustee responsibility
In SMSFs, all members of the fund must be trustees (or directors of the corporate trustee). Therefore, all trustees must be members. This means that the members take on the responsibility of the trustee function (unless you are a single member fund or you are qualified for an exemption).
In a SAF, trustee responsibilities are undertaken by an APRA-licensed trustee called a professional trustee company. To be a professional trustee company, an organisation must obtain and retain a Registrable Super Entity Licence issued by APRA.
So, unlike in SMSFs, where members undertake all trustee responsibilities and are vulnerable to compliance breaches, a SAF has a professional trustee that takes on the full responsibility of running the fund, including all risk management, legislative responsibilities and administration tasks.
It’s important to note that professional trustee services come at a price, mostly due to the long and costly process to obtain and retain a licence.
When should you use a SAF instead of an SMSF?
An SMSF offers its trustees plenty of benefits. But there are some instances when a SAF can be more beneficial for you.
- Lesser responsibility, more time. A SAF is a good option for anyone that wants greater control of their super investments but without the burden of trustee responsibility. It also gives an opportunity to people who want to use a small super fund but don’t have enough time to manage an SMSF.
- Eligibility for people with intellectual disability. By having a professional trustee, not only does a SAF offer estate planning certainty, it also allows members access to opportunities that are generally unavailable with an SMSF. One example is families wanting to provide an income stream for a relative with an intellectual disability (who are ineligible to be a trustee within an SMSF). A SAF can also be appropriate for people who are worried about the potential for their diminished mental capacity later in life, or ageing members who can no longer perform their trustee responsibilities.
- Bankruptcy. In SMSFs, a person who is bankrupt cannot be a trustee and hence cannot be a member. Additionally, super laws indicate that a bankrupt individual’s legal personal representative can’t act as their trustee on their behalf. In a SAF, a bankrupt is qualified to be a SAF member.
- Non-residency. If you are thinking of working or living overseas for an indefinite period of time, a SAF may be the right choice for you. Under the tax laws, choosing to become non-resident for income tax purposes makes you vulnerable to the risk of your super fund also being classified as a non-resident super fund. When this happens, the tax penalties can be very costly. In the year that a super fund changes from being a resident to being a non-resident fund, the market value of all investments and assets of the fund (except for non-concessional contributions) are taxed at 46.5 per cent. This hefty tax penalty also applies when you revert from being a non-resident fund to being a resident fund. You can avoid these penalties by changing your SMSF to a SAF before leaving the country.
Conclusion
While both SAF and SMSF are small funds for retirement savings, there are important differences between the two. Before choosing one, make sure to do your research and seek detailed financial advice that will work best for your personal circumstances.

Self managed super fund
SMSFs are shunning direct shares in favour of property – but is this a good idea?
For several years, SMSFs allocation to direct shares has been in decline. This trend accelerated after COVID. ...Read more

Self managed super fund
ATO issues draft legislative instrument for SMSF rollovers
The ATO has released a draft legislative instrument for consultation on the payment standard that will apply for SMSF rollovers and release authorities from 31 March 2021. ...Read more

Self managed super fund
Critical steps outlined with property transfers and trust cloning
While trust cloning can be an effective strategy for transferring an asset from a related trust to an SMSF without paying duty, it is vital the right steps are followed to avoid issues with the anti-a...Read more

Self managed super fund
Associations lobby government to ‘level the playing field’ with capital raisings
With SMSF and retail investors often missing out on ASX capital raisings, the SMSF Association and Stockbrokers and Financial Advisers Association have proposed a number of steps that could be taken...Read more

Self managed super fund
SMSF property spruiker sentenced in Brisbane District Court
A former Queensland property developer has been sentenced to five years’ imprisonment after being found guilty of six counts of fraud involving SMSF funds. ...Read more

Self managed super fund
COVID-19 reveals ‘flaws’ with account-based pensions
With the pandemic impacting the financial positions of many retirees, the inadequacy of account-based pensions has left many superannuation fund members exposed, according to a new research paper. ...Read more

Self managed super fund
Government pushed to rule out 3-year audits
While there have been no announcements regarding the proposed three-yearly audit cycle since June last year, one technical expert has urged the government to confirm that the measure is firmly “off ...Read more

Self managed super fund
Senate committee gives 6-member SMSF bill green light
The Senate economics legislation committee has recommended that the six-member SMSF bill be passed, despite concerns from Labor that it may lead to “perverse outcomes” for SMSF members. ...Read more

Self managed super fund
SMSFs are shunning direct shares in favour of property – but is this a good idea?
For several years, SMSFs allocation to direct shares has been in decline. This trend accelerated after COVID. ...Read more

Self managed super fund
ATO issues draft legislative instrument for SMSF rollovers
The ATO has released a draft legislative instrument for consultation on the payment standard that will apply for SMSF rollovers and release authorities from 31 March 2021. ...Read more

Self managed super fund
Critical steps outlined with property transfers and trust cloning
While trust cloning can be an effective strategy for transferring an asset from a related trust to an SMSF without paying duty, it is vital the right steps are followed to avoid issues with the anti-a...Read more

Self managed super fund
Associations lobby government to ‘level the playing field’ with capital raisings
With SMSF and retail investors often missing out on ASX capital raisings, the SMSF Association and Stockbrokers and Financial Advisers Association have proposed a number of steps that could be taken...Read more

Self managed super fund
SMSF property spruiker sentenced in Brisbane District Court
A former Queensland property developer has been sentenced to five years’ imprisonment after being found guilty of six counts of fraud involving SMSF funds. ...Read more

Self managed super fund
COVID-19 reveals ‘flaws’ with account-based pensions
With the pandemic impacting the financial positions of many retirees, the inadequacy of account-based pensions has left many superannuation fund members exposed, according to a new research paper. ...Read more

Self managed super fund
Government pushed to rule out 3-year audits
While there have been no announcements regarding the proposed three-yearly audit cycle since June last year, one technical expert has urged the government to confirm that the measure is firmly “off ...Read more

Self managed super fund
Senate committee gives 6-member SMSF bill green light
The Senate economics legislation committee has recommended that the six-member SMSF bill be passed, despite concerns from Labor that it may lead to “perverse outcomes” for SMSF members. ...Read more